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RBI Likely to Hold Policy Rate

The monetary policy committee, headed by the Reserve Bank of India Governor Urjit Patel, began its 2-day meeting Wednesday amid experts saying that the central bank is likely to hold the rate on Thursday while unveiling the first bi-monthly review of 2017-18 in view of hardening inflation, PTI reported. Rising interest rate in the US provides sufficient indication that benchmark policy rate of the RBI is not going to go down but may increase in the future depending on domestic and external factors, experts said. They were of the view however that RBI could announce some measures including standing deposit facility to absorb additional liquidity in the system following demonetization, announced on November 8, 2016. HDFC Bank chief economist Abheek Barua said RBI is likely to keep the repo rate unchanged in its upcoming monetary policy review. “In our view, the main focus of the central bank is likely to be on liquidity absorption in order to signal a neutral policy approach and for gaining additional headroom to intervene in the currency market,” he said.